Financial Horizons head says expect more consolidations under Great-West banner
Leading MGA Financial Horizons will remain an independent company even if its acquisition by Great-West Life Assurance Company is completed as expected later this year. That’s according to John H. Hamilton, president and CEO of Financial Horizons, who also confirmed the firm will continue its aggressive consolidation program heading forward. Since being purchased by private equity firm Genstar Capital in 2011, Financial Horizons has consolidated 30 businesses in the six years since.
Operating a network of 6,600 advisors across 30 branch offices nationwide, Great-West was but one of numerous potential buyers, reveals Hamilton.
“We went to market and had extensive interest from financial institutions, both in Canada and the US,” he says. “The current owners, Genstar Capital, as a private equity firm they had a five or six-year window before they wanted to move on – I knew that when I sold my majority share in 2011.”
Financial Horizons was founded in 1990 by Hamilton as a financial planning firm specializing in retirement and estate planning. It subsequently became an MGA in 1999 – the timing was no accident, explains the company head.
“The MGA market in Canada really started in the late 90s,” says Hamilton. “It has been very successful since – MGAs are the largest distributor of life products here. Industrial Alliance has an MGA it owns, NFIA. Manulife announced in January it would be going full-on with its MGA. The interest amongst the lifecos has come full circle and they now want to have some form of ownership in the MGA market.”
Now approaching its 20th anniversary as an MGA, Financial Horizons has thrived in a period when many of its competitors have fallen by the wayside. Its consolidation program is a reflection that scale is vitally important in the current climate.
“The regulators want to see oversight – if the life companies don’t have any input on distribution then it could cause a problem,” he says. “The life companies themselves don’t want to have a significant amount of MGA distributors; the expense involve keeping in tune with the regulators makes it hard for the smaller player.”
Being considered a smaller player is not a concern for Financial Horizons in 2017, and especially not if the Great-West deal receives approval. A partnership with one of Canada’s life insurance Big Three will mean certain standards will have to be met, but according to Hamilton, that doesn’t mean any great changes at the firm regrading operations.
“I don’t think there’s another MGA that has had the aggressive strategy I had,” he says. “That strategy will not change going forward. We are an independent company inside the Great-West group. We have our own board, our own governance and will remain fully independent.”Related stories:
Great-West CEO explains decision to slash 1,500 jobs
Insurance heavyweights report Q1 2017 earnings
